OpenAI Sees Heavy Losses while Rival Anthropic Projects $70B Sales by 2028

OpenAI is absorbing heavy losses even as it pursues fresh capital and weighs a public listing to sustain its rapid expansion. The Wall Street Journal reports the company lost $12 billion last quarter, with an average cash burn of $1.25 billion over the past two quarters—figures that nearly mirror its net loss.

Despite the red ink, CEO Sam Altman expects $13 billion in revenue this year and targets $100 billion by 2027. Rival Anthropic, meanwhile, projects $70 billion in sales by 2028, positioning itself to surpass the ChatGPT maker in both revenue and cash flow.

This rivalry between the two AI giants is intense, each presenting a different pitch to investors. OpenAI could potentially become the first AI company to go public with a valuation surpassing $1 trillion, while Anthropic is aiming for a valuation of up to $400 billion. With major tech giants as partners for both firms, the competition remains fierce and complex.

Growing Competition and Strategic Moves

Anthropic has developed Claude, its next-generation AI assistant capable of functioning as both a chatbot and a productivity tool. Notable investors include retail giant Amazon, which invested $8 billion, and Google's parent company Alphabet, which invested $3 billion. These investments have reportedly boosted Anthropic's third-quarter profits.

Dario Amodei, CEO and co-founder of Anthropic, previously served as vice president of research at OpenAI. In an interview with 'The Information', Amodei outlined the company's ambitious financial outlook. He predicts that revenue and cash flow could reach $70 billion and $17 billion, respectively, by 2028, driven by rapid adoption of Anthropic's business products.

Regarding annual recurring revenue (ARR), the company targets $9 billion by year-end, with plans to reach between $20 billion and $26 billion next year. Anthropic expects to generate $3.8 billion in revenue from API sales, providing access to its AI models, compared to OpenAI's forecasted $1.8 billion from API sales.

The rivalry is further complicated by Microsoft, which owns a 27% stake in OpenAI. Microsoft has partnered with Anthropic to integrate Claude AI models into its 365 applications and Copilot assistant for enterprise use. This B2B strategy appears to be paying off for Anthropic.

In early October, IBM announced a partnership with Anthropic to accelerate the development of enterprise-ready AI. IBM plans to integrate Claude into various internal and external tools, promising new productivity gains for clients. Mike Krieger, Chief Product Officer at Anthropic, said, 'Claude has become the go-to AI for developers at the world's largest companies because of our focus on safety and reliability.'

Capital-Intensive Business with Huge Investment

OpenAI's heavy spending on R&D, compute infrastructure, and data centres underpins its capital-intensive model. The company projects a cash burn of around $14 billion next year, expecting infrastructure investments to eventually translate into substantial revenue growth.

In a notable development, OpenAI and SoftBank have launched SB OAI Japan, a joint venture aiming to introduce "Crystal Intelligence', a packaged enterprise AI solution designed to boost productivity and management efficiency through advanced AI tools.

High-Risk, High-Reward Future for AI Giants

Both OpenAI and Anthropic are making risky bets on AI's future, driven by the hopes of substantial returns. For everyday users, the financials are less relevant. Consumers and businesses will experiment with both ChatGPT and Claude, choosing which conversational AI tools best meet their needs.

As competition intensifies and investment pours in, the AI industry is poised for rapid evolution, with both companies aiming to redefine the future of artificial intelligence and enterprise adoption. The coming years will be critical in determining which firm emerges as the dominant player in this fast-moving landscape.

Disclaimer: Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional guidance before investing. Remember, investments are subject to market risks, and past performance does not guarantee future results.